5 Innovative Indian companies to boost your portfolio

Published : September 5, 2017

5 Innovative Indian Companies to Boost Portfolio in 2016

5 Innovative Indian companies in 2016 get ranked in Forbes list of world’s 100 most innovative companies. Since last six year, Forbes is coming up with this list. Asian Paints Ltd ranked 18, HUL 31, Tata Consultancy Ltd 66, Sun Pharma 73 and L&T 89 among the list of 100. These companies are worth considering for long-term perspective due to premium which they bag due to innovation as discuses in the article.

5 innovative Indian companies that came in Forbes list of 100 innovative companies was based on “innovation premium” which is calculated as a difference between net present value (NPV) of projected cash flows from a company’s existing businesses without any growth and the company’s current total Enterprise Value (EV). Companies having EV above calculated NPV are considered showing innovation premium into their stock price.

The Innovation Premium is about the growth that is expected in the future. For any company to be included in the list it needs to have seven years of public financial data and around ten billion dollar market capitalization. The industries to get ranking in Forbes most innovative list are chosen that are known to invest in innovation but not those companies that have no measurable investment in R&D. Bank, financial services, energy companies and mining firms are excluded from the ranking list.

All these five innovative Indian companies are doing fine as their share prices reflect this. The overall sectorial demand is giving an optimism for the five companies covered in the blog to make good pace to adjust to the future innovative environment, and hence the “premium” be reflected in their future share price.

Asian Paints Limited

Asian Paints Limited, a paint company is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to home décor and bath fittings. It operates in over 20 countries and has over 30 manufacturing facilities, servicing consumers in over 65 countries. Increase in year over year revenue is due to strengthening of the customers’ base.

In March 2016 Company’s revenue stood at Rs.153307.2 million and has increased by 9.4 percent when compared with March 2015 which was Rs.140053.3 million. EIBTA of the company in FY2015 was Rs.22354.1 million and it rose to Rs.28086.2 million in FY2016.

The innovation of the company is being reflected on the Asian Paints share price, as the prices is found rallying straight with trifling corrections. The price is rising with ascending triangle along with higher high and higher low formation on weekly chart. Technically sustaining above at 1100 levels the stock will prepare to make new all-time high with strong resistance at 1260 levels and then at 1440 levels. Support is at 960 Levels.

Tata Consultancy Services Limited

Tata Consultancy Services Limited (TCS) is engaged in providing information technology (IT) services, digital and business solutions. It is providing solutions to segments like banking, finance and insurance services (BFSI); manufacturing; retail and consumer packaged goods (CPG); telecom, media and entertainment, and others, such as energy, resources and utilities, hi-tech, life science and healthcare, s-Governance, travel, transportation and hospitality, and other products.

The good results of last financial year ending March 2016 makes TCS investor’s choice in their portfolio. Annual revenue of the company in FY 2015 was Rs.946484.1 million gaining by 14.9% in FY 2016 with Rs.1086462.1 million. The EBITA also gained by 28.64 % in FY 16 to Rs.305897.91 million as compared with Rs.271100 million in FY 2015.

TCS share prices, a global leader in all categories of software testing services, is found consolidating in a range of 2660 levels and 2200 levels. Technically price is moving within a parallel channel and currently it took support at lower part of the channel. The innovativeness of the company may boost further revenue growth and hence its share price move above the upper resistance of the channel. Above it TCS may move towards 2975 levels and then 3635 levels.

Sun Pharma Laboratories Limited

Sun Pharma Laboratories Limited is a pharmaceutical company, engaged in the business of manufacturing and promoting Branded Generic pharmaceutical products. It has strong footing in the therapeutic segments of Neurology & Psychiatry, Central Nervous System, Cardiology, Gastroenterology, Diabetes, Gynecology etc.

The revenue of the company rose to Rs.277441.6 million in FY2016 as compared to Rs.272865 million in FY2015 gaining by 1.6%. While EBITA of the company in FY2016 increased to Rs.84816.20 million as compared to previous year’ figure of Rs.80636.40 million.

On weekly chart the Sun Pharma stock prices is found correcting after making a high of 1200 levels however it fails to correct below 727 support levels. Technically share prices is following a falling channel. The revenue of the company, no doubt, will rise in coming quarters as the company is generating innovative premium. This may help share price to break the channel for 1365 levels or above.

Larsen & Toubro

Larsen & Toubro, a conglomerate, has global operations in almost 30 countries mainly in technology, engineering, construction, manufacturing and financial services. It operates in the business vertical of Hydrocarbon, Infrastructure, Power, Process Industries and Defense.

EBITA for the company in FY2016 rose to Rs.123427.30 million from Rs.113356.10 million gaining by almost 8.8 percent. Revenue of the company in FY 2016 was Rs.1026316.90 million which was a gain of 11.5 % of the previous years’ revenue which stood at Rs.920045.80 million.

The recent L&T stock price was found in a rising channel. However, historically it is unable to break a parallel channel a high around 1890 levels at the same time it also failed to cross below middle of this channel. Currently it is trading just below one of its very crucial resistance of 1480 levels and closing above it is likely to result in breakout of this channel.

The company performed well in FY 2016, its EBITA rose to Rs.59495.96 million from Rs.54137.30 million. Revenue of the company was Rs.311997.20 million in FY 2015 ending on 31 March which rose to Rs.324827.20 million in FY 2016. The detailed article on Hindustan Unilever Ltd covering the effect of innovative premium on its share price is published on September 18, 2016 titled “Hindustan Unilever Ltd High Innovation Premium.”

About Author

Founder and promoter of the Raghunandan Money Group, Mr. Saurabh Mittal is a Management Graduate having rich and extensive experience of more than 19 years. He has an in-depth knowledge and a strong understanding of various intricacies of Financial Markets. It is through his exceptional leadership skills and outstanding commitment towards the group that Raghunandan Money today has become the leading Broking House with an extensive client base and widespread network of sub brokers & branches. His efforts have led to the diversification of group businesses from Equity & Commodity Broking to Depository Services, IPOs
& Mutual Funds distribution, Insurance Products, Wealth Management, Advisory Services and Financial Education. Under his leadership, the organization has rapidly expanded and made a widespread presence across India and has seamlessly grown into a financial services company
par excellence.